“Only buy something that you’d be perfectly happy to hold if the market shut down for 10 years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a ten year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Digital Realty Trust Inc (NYSE: DLR)? Today, we examine the outcome of a ten year investment into the stock back in 2012.
| Start date: | 03/21/2012 |
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| End date: | 03/18/2022 | ||||
| Start price/share: | $72.48 | ||||
| End price/share: | $138.99 | ||||
| Starting shares: | 137.97 | ||||
| Ending shares: | 207.59 | ||||
| Dividends reinvested/share: | $37.97 | ||||
| Total return: | 188.53% | ||||
| Average annual return: | 11.18% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $28,849.65 | ||||
The above analysis shows the ten year investment result worked out quite well, with an annualized rate of return of 11.18%. This would have turned a $10K investment made 10 years ago into $28,849.65 today (as of 03/18/2022). On a total return basis, that’s a result of 188.53% (something to think about: how might DLR shares perform over the next 10 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Digital Realty Trust Inc paid investors a total of $37.97/share in dividends over the 10 holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 4.88/share, we calculate that DLR has a current yield of approximately 3.51%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 4.88 against the original $72.48/share purchase price. This works out to a yield on cost of 4.84%.
Here’s one more great investment quote before you go:
“Sometimes buying early on the way down looks like being wrong, but it isn’t.” — Seth Klarman
